Finance Minister Purbaya Denies Knowledge of Plan to Widen Budget Deficit Ceiling Above 3%
Jakarta — Finance Minister Purbaya Yudhi Sadewa has responded to circulating reports of a government and parliamentary plan to expand the budget deficit ceiling for the 2026 State Budget and Expenditure (APBN) above the 3% of GDP threshold.
The 3% limit of gross domestic product represents the maximum deficit threshold stipulated in Article 12 paragraph 3 of Law No. 17 of 2003 on State Finance.
Purbaya stressed that he is unaware of any plans to revise the maximum deficit threshold provision. He also confirmed that Indonesia’s state budget continues to be robust in responding to fluctuations in global economic uncertainty, particularly the conflict between Iran and the United States and Israel.
“I don’t know yet, it’s probably still being considered. But we always calculate the impact of rising global oil prices on our budget. So if there is a decision needed later, we will calculate its impact,” Purbaya said firmly at his office in Jakarta on Friday, 13 March 2025.
Purbaya also evaded the option of discussing the deficit expansion plan with President Prabowo Subianto in the last limited cabinet meeting, particularly due to the effect of volatile oil prices, which could potentially burden government energy subsidy spending and result in deficit expansion.
“I don’t really remember that; I looked at economic issues only (discussed in the cabinet meeting),” Purbaya said.
Previously, the Chair of the House of Representatives Budget Committee (Banggar) Said Abdullah also reaffirmed that the state budget deficit will remain below the 3% limit of GDP as mandated by the State Finance Law.
According to Said, this commitment is important for maintaining fiscal stability whilst providing a positive signal to the market and investors. The House through Banggar is committed to complying with the fiscal policy framework established in the law, including the budget deficit limit.
“As Chair of Banggar, we comply with the State Budget Law and State Finance Law. Our deficit limit is 3% of GDP, and I have never had the intention to exceed that limit,” Said said, cited from the House website on Friday, 13 March 2025.
He explained that Indonesia’s fiscal condition remains within a relatively safe corridor. Banggar estimates that the state budget deficit can still be maintained at around 2.8 per cent of GDP, so there is no scenario leading to exceeding the established deficit limit.
“I believe our deficit can still be maintained at around 2.8 per cent. We do not need to worry excessively as long as fiscal management is conducted with discipline,” he explained.
Said added that various global dynamics, including geopolitical fluctuations and volatile world oil prices, could potentially put pressure on the economy. However, he assessed that the government has sufficient policy space to mitigate these various risks.
According to him, the government need only strengthen fiscal management through sharpening priority programmes and more effective state spending management. He believes this step can maintain fiscal health whilst strengthening national economic resilience.